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Footnotes: Lincome Tax Planning and Other Silly Things | 07.19.12

Posted on by Caleb Newquist

Priceless SpongeBob SquarePants Coins Couldn’t Prevent Collapse Of Peregrine Financial Group [DB]

U.S. corporate auditor watchdog gains access to Spain [Reuters]

You Got the Accounting Job. Now What? At PricewaterhouseCooper [sic], it takes an average of 13 years to become a partner, says Paula Loop, U.S. and global talent leader for the firm. As a person progresses up the ladder, organizational, communication and managerial skills become more important. "The technical competency is fundamental, that's really more of a baseline," she says. "Once you move up, you need to be able to organize a team and manage really large projects. You have to be opportunistic and be willing to jump on new opportunities. You should have agility and be able to work in different countries and work in different areas of expertise." [FINS]

This is Lincredible: Did Jeremy Lin Leave the Knicks for Lincome Tax Break in Lin-Star State? Wait..What? [DT]

JCT: GOP tax plan costs $29 billion more than Dems [The Hill]

Fraud case versus Grant Thornton over telecom audit revived [Reuters]

CMEDY (Update): Dude, So That’s What You Did With My Company [TFI]

SEC Charges Chicago-Based Consulting Firm and Executives With Accounting Violations The SEC found that Huron Consulting Group Inc., a provider of financial and operational consulting services to clients in various industries, failed to properly record redistributions of sales proceeds by the selling shareholders of four firms acquired by Huron. The selling shareholders redistributed the money to employees at those firms who stayed on to work at Huron as well as other Huron employees and themselves. Because the redistributions were contingent on the employees’ continued employment with Huron, based on the achievement of personal performance measures, or not clearly for a purpose other than compensation, Huron should have recorded the redistributions as compensation expense in its financial statements. By failing to do so, Huron overstated its pre-tax income to the public. Former chief financial officer Gary Burge and former controller and chief accounting officer Wayne Lipski oversaw these accounting decisions at Huron. [SEC]

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Crisis Probes Fail to Meet High Bar [WSJ]
Late on Friday, former AIG executive Joseph Cassano learned that he wouldn’t face criminal charges for his actions as the head of the company’s Financial Products division. According to the Journal, prosecutors did come close to filing criminal charges against Cassano and others but it was felt that the high burden of proof that “there was criminal intent behind executives’ decisions and that they intentionally misled investors” could not be met.

The government isn’t quite finished with Cassano, as he still may face civil charges from the SEC, which has a lower standard of proof.


The SEC’s Mary Schapiro on the Myths of GAAP/IFRS Convergence: The Lady Doth Protest Too Much [Re:Balance]
Jim Peterson took a closer look at Mary Schaprio’s speech at the annual conference of Chartered Financial Analysts where she mentioned IFRS but also convergence efforts between the IASB and the FASB. The SEC has maintained that convergence should be the initial goal for reporting standards.

Jim is concerned that the gap between the ultimate goal of convergence and the reality of some of the key issues at stake are no small feat:

There is, indeed, no more eloquent concession of the “convergence gap” than Schapiro’s own admission that “US GAAP and IFRS are currently not converged in a number of key areas,” including “the accounting for financial assets (the very types of securities at the center of the financial crisis), revenue recognition, consolidation principles, and leases.”

Any other problems, Madame Chairman? These on her list are so comprehensively grave that they will keep the international standards standoff alive until the end of time.

Which would put IFRS on a even longer track to adoption.

IRS audits of schools might delve into salaries of coaches [USAToday]
The IRS’ interest in the determination of the highest paid employees for colleges and universities has a few people worried. Not necessarily because anything is wrong but because the IRS is just a scary beast, “John D. Colombo, a University of Illinois law professor who has written about tax exemption and college athletics, says he doesn’t think the IRS action will fundamentally alter college athletics business. But he adds, ‘Audits are never comfortable. Just the IRS being there asking questions makes people nervous.'”

Primarily, the IRS is concerned over the business activities that higher education institutions engage in that aren’t “related to the schools’ primary purpose.” The interest in athletic coaches’ salaries is such that these individuals are often some of the highest paid employees of the school. The IRS is interested in how colleges and universities justify these salaries and to ensure that corporate sponsorships (not considered to be a business activity) are complying with certain rules so they are not considered advertising revenue.